Higher production costs and differing work cultures are unlikely to be decisive in the success or failure of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) expansion into the US, said Chris Miller, the author of Chip War: The Fight for the World’s Most Critical Technology.
In a recent interview, Miller, an associate professor at Tufts University’s Fletcher School of Law and Diplomacy, said that while Taiwan’s successful “model” in the chip industry is unlikely to be reproduced, Taiwanese companies still have to globalize their production in order to remain competitive.
To that end, TSMC has launched plans to build plants in Dresden, Germany, the US state of Arizona and Japan’s Kumamoto Prefecture.
Photo: CNA
The Arizona project in particular has faced a string of setbacks, including higher-than-expected costs, complaints by US employees of a “brutal” corporate culture, and construction delays at both factories it is building.
Despite these challenges, Miller said he disagreed with the notion that there is anything uniquely difficult about building chips in the US, adding that Samsung Electronics Co and Texas Instruments Inc both operated profitable plants there.
Intel Corp has also built chip plants in the US, and while they have had problems recently, those have mainly been related to design rather than construction, he said.
In terms of workplace culture, Miller said that leading countries in chip production — beginning with the US in the 1950s, then Japan and now Taiwan and South Korea — have always touted their respective work culture as being the best suited for the industry.
“It seems to me that the chip industry shifts too rapidly to have culture be a really effective explanatory factor,” Miller said.
Rather, in order to succeed, the onus is on companies to make sure that their work culture fits, or is capable of “assimilating,” in different geographies, he said.
Miller was also skeptical of the argument that higher production costs in the US would prove a major obstacle.
“TSMC’s success internationally has not been due to cost efficiency. It’s been due to better technology,” he said.
“I think over-focusing on cost underestimates what makes the Taiwanese workforce so effective,” which is related not to low wages, but the fact that they are highly skilled, he said.
Overall, Miller said he was waiting to see how TSMC worked through other challenges related to its US expansion, including making the Arizona facility work within its broader business.
As it does so, TSMC, as well as competitors Samsung and Intel, are all likely to receive assistance in the form of billions of dollars of US government subsidies, stemming from the Creating Helpful Incentives to Produce Semiconductors and Science Act in 2022, Miller said.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his